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Monday, June 12, 2000

APBNews: High-Speed Chase For Funding

By Arik Hesseldahl

Up until the very last minute, everything, at least from the outside, looked good for APBNews.com.

In an age where TV viewers will watch the O.J. Simpson murder trial live day after day, hang on the every detail of the JonBenet Ramsey murder case, the crime news Web site sought to build a media brand on the public's fascination with crime.

Its less-than-memorable name inspired by the old police term "all points bulletin," APBNews quickly distinguished itself on the national media landscape, securing both industry accolades and big name employees, including two Pulitzer Prize winners--Sydney Schanberg, a former reporter for The New York Times, and J. Robert Port from the Associated Press. Former O.J. Simpson prosecutor Marcia Clark joined as a columnist, as did Fox News anchor Bill O'Reilly.

In only 18 months of operation, stories on the site earned three industry awards from the Society of Professional Journalists, the Scripps Howard Foundation and Investigative Reporters and Editors Inc.

APB management called its 140 staff together on June 5 to announce that the site had run out of money to pay them. Several staff members accepted an offer to stay on board through the end of the week, working for free--there wasn't sufficient cash to offer severance packages--in the hope that a new investor could be found.

Negotiations over a third round of venture funding had failed, apparently the victim of the shifting tide of investor taste for Internet companies. Prior to that, a rumored acquisition by Rupert Murdoch's News Corp. (nyse: NWS) did not materialize.

It was an sudden twist of fate for Chief Operating Officer and co-founder Mark Sauter, who in recent interviews with The Columbia Journalism Review and Business 2.0, confidently predicted he would land a third round of funding, with an eye toward eventually taking the company public. In reality, the company was millions of dollars in debt, with insufficient funds to pay its staff for even a half-day's work and no plans beyond the charity of a white knight investor for salvation.*

The news jolted media circles in New York, where many people either had interviewed to work for APBNews at one point or knew someone who worked there.

APBNews was just one of many content-based Web sites with bad news for its employees in recent weeks. On May 18, Hollywood-based Digital Entertainment Network shuttered its site, laying off 150 people. Last week CBS, a unit of media giant Viacom (nyse: VIA), laid off 24 of 100 employees in its Internet division. On June 8, online magazine Salon.com (nasdaq: SALN) announced the firing of 13 employees in order to cut expenses by 20%.

Sreenath Sreenivasan, a professor of journalism at Columbia University, says he has regularly pointed to APBNews as a good example of online niche journalism. But when asked if such a site can make money, his stock answer is "I'm not sure."

"We had heard about problems at other sites, and this one came as a real shock," Sreenivasan says. "Good journalism, whether online or anywhere else, requires a lot of financial resources."

With investors pulling away from various e-commerce sites that deal with tangible goods and services, Sreenivasan says, it's even harder to attract investors to sites that deal in a product as intangible as journalism, no matter how well produced or useful.

"It's a very tough atmosphere right now," he says.

APBNews prided itself on hard-nosed, newspaper-style crime reporting. In one notable case, it sued federal judges and won over whether judges should be required to disclose their personal financial data to an Internet news service. In another, the site presented research that two-thirds of U.S. Major League Baseball stadiums are located in high-crime areas. The staff was known to have thousands of Freedom of Information requests pending at any given time with agencies all over the country.

In addition to old-fashioned reporting, the site experimented with new ways to put the Internet to use in telling crime stories. Readers could take a 360-degree tour of the site where Amadou Diallo was gunned down by police officers in the Bronx or examine images of clues in the JonBenet Ramsey murder. Site visitors could also listen to live streaming audio of police scanners around the country or check the crime statistics for their neighborhood.

 

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